Sluggish growth and economic chaos in Europe made a grim backdrop to George Osborne’s fourth Budget last Wednesday. It was more of a Budget week than a Budget day as the Chancellor and the Government spaced out key announcements over several days.

The perilous state of the public finances left scant room for big economic giveaways, with every handout having to be balanced by a tax rise or spending cut.

Financial Mail highlights the key developments of the past week and explains how they fit with tax and benefit changes already in the pipeline.

Relief: Jermaine Dixon and his mother Millicent, who need their cars for work, greeted the axeing of a rise in fuel duty

Drivers, beer drinkers and some homebuyers are among those who will see quick gains from the Budget. And longer term, up to two million more families may profit from a new tax break on childcare costs, worth up to £1,200 per child. The Government also accelerated its plans for radical reforms of State pensions with a simpler, flat-rate payment for those retiring from April 2016.

But six million workers will see future increases in their National Insurance bills as a side-effect of pension changes.

And many of these are public sector employees who will also face a further 12 months of restrictions on their pay.

The Budget produced no significant changes to the key personal allowances for the new tax year starting next month.

These were set out in the Autumn Statement last December. Most taxpayers will gain from a higher personal allowance, which will rise from £8,105 this tax year to £9,440 for the tax year starting on April 6. But at the same time, the slice of income on which you pay 20 per cent tax is narrowed, which means the higher rate 40 per cent tax will now kick in with incomes of £41,450 rather than £42,475.

And Osborne snubbed calls to rethink the ‘granny’ tax. The higher personal allowances for older taxpayers, worth £10,500 or £10,660 depending on age, will be frozen from April and eventually disappear when the standard personal allowance reaches this level. Those who reach 65 after April 5 will not qualify for the higher age-related personal allowance at all.

The Budget’s new development was a further rise in the personal allowance from April 2014, increasing it to the Coalition target of £10,000 and taking about three million workers out of the income tax net altogether.

The extra increase is worth £112 to most taxpayers, although those with earnings above £100,000 will see the allowance progressively clawed back until it disappears once their income passes £120,000.

Over the next two years, the changes to the tax thresholds will see an extra 800,000 households paying income tax at the 40 per cent rate, with almost five million people classed as higher-rate taxpayers.

But the Low Incomes Tax Reform Group warns that some of the nation’s poorer households will not benefit fully from a higher personal allowance. Their extra income will reduce the amount of means-tested benefits they qualify for.

They are also being hit by further squeezes on family and working tax credits. The value of key parts of the benefit, such as the family element, is being frozen in the next tax year, while there are tighter rules governing Child Benefit. It remains frozen at £20.30 a week for the eldest child and £13.40 for other children, with no modification to the tax charge that effectively sees families stripped of the payment once one parent earns £60,000.

The basic State Pension rises by 2.5 per cent next month to £110.15 a week for a single person. Additional State pensions such as Serps go up by 2.2 per cent, worth about another 65p a week for someone with average entitlement. The minimum income for pensioners guaranteed under the Pension Credit will rise by £2.70, to £145.40 a week for a single person and by £4.15 to £222.05 a week for a couple.

There was some welcome relief. Jermaine Dixon and his mother Millicent are pleased about the decision to axe the 2p-a-litre rise in fuel duty and VAT, due for September. This will save motorists about £480 million during the next tax year. Jermaine, 26, from Kingstanding in Birmingham, covers 60 miles a day. He drives between home, university in Coventry and his job as a trainee litigator for the AA in Oldbury, because public transport links between all three locations are not adequate.

He drives a Honda Civic hybrid and spends about £80 a week on petrol. He lives with Millicent, 46, who is a nurse and also needs a car for work and for visiting some patients in their homes. She drives a Vauxhall Meriva and spends between £80 and £100 a week on fuel.

‘Sometimes it seems as if I’m working just to be able to buy fuel,’ says Jermaine. ‘But I need a car because there is no train or bus that can get me from university to work in an hour.’

Jermaine and Millicent will together save about £120 a year in duty and VAT because of the change. ‘It’s good news and a saving in my pocket – I’m quite shocked,’ says Jermaine.

The Chancellor also grabbed headlines with a 1p-a-pint cut in the tax on beer from tomorrow, although duty on other alcohol rises.

Another key long-term change will see a complete overhaul of State pensions for those retiring from April 2016. This is a year earlier than previously planned.

The current mix of basic State Pension, plus additional earnings-linked pensions such as Serps and State Second Pension, will be replaced by a more generous single-tier pension, worth £144 a week.

This should boost pensions for those such as carers and the self-employed who have found it hard to earn an adequate State pension previously. And it will also end the indignity of means-tested benefits for the next generation of pensioners.

The earlier date for the introduction of the new single-tier pension is great news for 80,000 women born between April 6, 1953 and July 5, 1953. They will now be eligible for the new State pension after being excluded as a result of a previous decision by the Government to push back the start date for the single tier State pension to April 2017, meaning they reached State retirement age before this key date.

Sterling work: Campaigner Louise Fox

Over the past month, Financial Mail has campaigned on behalf of these 80,000 women, highlighting the sterling work done by Louise Fox, 59, a clinical governance manager for a healthcare company from Amersham, Buckinghamshire, in getting MPs to listen to their case.

More than 700 women backed her fight for pensions justice following a series of articles in Financial Mail. Jeff Prestridge, Personal Finance Editor, joined Louise at the Commons in pressing the case for the 80,000.

‘You went out on a limb to support our cause for pensions fairness,’ Louise told Financial Mail. ‘A very big thank you. Justice has prevailed.’

Those already drawing their State Pension stay on today’s system. But there is a sting in the tail. The new system will mean the end of contracting out, where employers who run final salary pensions can match the benefits paid through the State Second Pension in return for lower National Insurance contributions.

From April 2016 onwards contracting out will disappear and, as Financial Mail explained in January, both employers and employees in defined benefit pensions will face higher tax bills.

The employee NI rate will rise from 10.6 per cent to 12 per cent, raising a total of £1.6 billion a year in extra tax. Using current NI thresholds, the increase would cost someone earning £30,000 an extra £313.53 a year. But they will qualify for a bigger State pension in return.

High earners are main gainers

Higher earners will be the biggest winners from changes to income tax and National Insurance that come in next month.

The cut in the top rate of income tax from 50 per cent to 45 per cent means they keep 5p extra of every pound earned above £150,000.

The combined effect of tax and National Insurance will now take 47p in the pound of income instead of 52p.

Those on average incomes in the £25,000 to £50,000 bracket gain slightly from the boost in personal allowance, the extra income you can have before tax applies.

This rises from £8,105 in the current tax year to £9,440 in the new tax year starting on April 6. Those earning between £114,000 and £152,000 end up worse off in the new tax year.

They miss out on the benefit of a higher personal allowance, which starts to be clawed back once their income passes £100,000. However, they still end up paying 40 per cent tax on a bigger slice of their earnings.

This is because the 40 per cent rate will kick in at £32,011 of taxable income, rather than £34,371.